I have moved, read more about Iphone Location Spoofing & LBS
A team of researchers have found that your location can be spoofed on the Apple iPhone. This was bound to happen considering the technology being used (Skyhook’s WiFi Positioning System). You can read the full article at cellular news.
The use of sky-hooks system is a useful addition to the iPhone and makes sense when you consider that the iPod Touch does not have GSM capabilities. Though this is not the best and most reliable solution for the iPhone considering the GSM capabilities.
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